Infineon, BrainChip, Nvidia - The chip market remains hot

Infineon - Competitor helps with good figures

Infineon almost has to be considered an exotic player in the semiconductor industry. Most chips are manufactured in Asia or the USA. Infineon, on the other hand, operates from Europe. Things went very well for the Company in 2021, even though the share only managed to break out to the upside at the end of October. Even in times of crisis, the Company emphasized that prices for customers would only rise moderately, if at all. In contrast, its competitors were asking customers to pay a fair amount. Infineon's management justified this approach by saying that it always wanted to work with customers long-term.

The fiscal year ended on September 30, and the Company reported a 29% increase in sales. The margin is 18.7%. CEO Ploss believes the Company is also well prepared for the coming year: "Given the continued high demand for semiconductors for the energy-efficient and connected world, we expect a strong fiscal year 2022."

The semiconductor market is doing well, as most recently shown by Micron, which presented figures on December 21, exceeding analysts' expectations. This news also boosted the Infineon share, which had recently consolidated after the substantial rise. Thus, the share was able to start the rebound at the support level of EUR 38.50. On December 23, the Company announced that Black Rock had further increased its position. UBS recently raised the price target from EUR 45 to EUR 49 and continues to rate the stock as a "buy".

BrainChip - Milestone reached

The Australian Company BrainChip has developed a special kind of chip. The Akida chip is used as edge AI, i.e. artificial intelligence on the chip itself, without cloud and internet connection. The chip does not need a CPU to do its calculations but works autonomously and responds to impulses and events. As a result, Akida requires much less power. This approach makes it attractive for IoT devices, autonomous driving, security technology, and more. In addition, this technology is significantly more secure and meets the more stringent data protection requirements when used.

Sales of development kits for X86 and ARM systems started at the end of October. On November 21, the Company signed a cooperation agreement with MegaChips. MegaChips will integrate the Akida technology into their products, which should benefit both companies. In addition to the license fees that BrainChip collects, additional revenues could beckon through application-specific developments and projects of all kinds in cooperation between the two parties. For BrainChip, the deal means about USD 2 million in revenue in 2022 and direct access to MegaChips' customers.

MegaChips plans to market the Akida chips to the automotive industry and companies with robot production. The artificial intelligence sector is expected to grow strongly in the coming years. Since October, the share has risen from AUD 0.365 to AUD 0.75. Since then, the stock has been consolidating and is currently trading at AUD 0.66. Only a closing price below AUD 0.595 would break the intact upward trend. The analysts at Pitt Street Research see AUD 1.50 as a price target. Therefore, the share has much more potential than the current share price.

Nvidia - Omniverse on the rise

Originally, Nvidia's main business was the production of graphics cards, but over the last few years, the artificial intelligence (AI) business in the data center is growing faster and faster and will become the primary revenue driver in the coming years. Many experts consider the Company to be a leader in AI, so it is not surprising that Nvidia continues to expand in this area. At the beginning of November, it presented its visions at the BEYOND event, including autonomous driving and AI-controlled assistants for corporate customers.

An analysis by Forrester Research suggests that AI is changing the world. 74% of the companies surveyed said that the introduction of AI has had a positive impact. Nvidia itself sees the Metaverse, referred to by the Company as the Omniverse, as an important upcoming market. It expects revenues to rise sharply in the coming years. By 2025, it should already be USD 400 billion, according to crypto firm Grayscale. The US analyst firm Needham expects 100 million digital bots in the virtual world.

Nvidia is therefore involved in many future topics. We should also mention cloud gaming, which also promises decent growth, in addition to the already mentioned areas. The shortage of GPUs will remain for the foreseeable future, even though China has banned crypto mining. The stock has recently suffered a minor setback. It went down from USD 346.47 to USD 271.45. A double bottom was formed there, and since then, the stock has been rising again to currently USD 296.40.

Conclusion

The chip shortage remains for the time being, and the topic of AI is becoming increasingly important. Infineon will have no problems selling its produced chips in the coming year. BrainChip has found a strong partner to produce and distribute its AI chips. Nvidia is and remains the top dog in AI and is excellently positioned in many future-oriented areas.